Four budget talking points

April 22, 2009 by
Filed under: Credit crunch, Politics 

A new  dividing line?

One reason Labour lost in the eighties was that the Conservatives won over the aspirational working class and lower middle class. Labour was perceived to be the party only of the poor and the public sector. Today Alistair Darling tried to draw the line in a different place: between the middle class and the rich, hoping the Conservatives will stumble into the trap of being portrayed as only representing the interests of the latter. David Cameron’s initial response that cutting the 50p tax rate won’t be a priority for an incoming Conservative Government suggests he will avoid that trap (but look out for a backlash from Tory traditionalists who may want to insist that the Conservatives make this, at least, an aspiration for their first term).

Growth: Short and medium term

The Government’s medium term growth forecast (3.5% from 2011 onwards), for which Labour will not have to answer at the next election,  is very optimistic; its 2010 forecast of 1.25% (for which it will) may be more realistic. Alastair Darling will hope he will  be able to report next spring the economy is hitting or even exceeding the 2010 target. And if Labour scrapes a victory at the election and then misses the more ambitious target for 2011 it will have until 2014 or 2015 to change the script.

Efficiency savings and cuts

Already the IFS and others are questioning whether the £5 billion in efficiency savings for next year can be achieved without service cuts in areas like health and education. I suspect not. However, Labour won’t necessarily be too worried about this. Even if people are suspicious about Labour on cuts it won’t automatically make them warmer towards the Conservatives.

1991 or 1996?

I wrote a blog a few weeks ago asking whether today feels more like 1991 (before a  Government re-election) or 1996 (before an Opposition landslide) . Commenting on the budget a Government insider reminded me of this saying;

‘By next year we will be just emerging from recession; roughly the same point in the cycle as 1992. Most people’s focus will be on day to day living standards – we need to have a powerful case to make then’

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2 Comments on Four budget talking points

  1. pregethwr on Wed, 22nd Apr 2009 7:41 pm

    2. My answer is that the Government is in 1996 but the opposition is in 1991 – result narrow opposition win?

  2. Brian Finch on Fri, 24th Apr 2009 10:01 am

    3. As you say, Mr Darling has laid a trap for the Conservatives over taxation of higher earners. But this should also focus us on the problem: rather than addressing the issues of the economy he focuses his energy on laying political traps.

    However politically unpopular bankers and lawyers and high-earners in general may be at present it does not take many individuals and companies to move to other tax jurisdictions nor to decide not to establish in the UK in the first place for this to have been a very bad idea for the real economy. Oh and let us not forget the certain increase in the number of folk who will feel their tax rates are unreasonable and will be in a position to move funds abroad and not declare income arising on them.

    I would prefer a government that focused on real problems in the economy rather than on laying political traps at the expense of the real economy. But then the problems of the public finances are somewhat intractable and, to a large extent, self inflicted but that is another story.

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